I ditched corporate America in 1994 and started a management consulting and venture capital firm (http://petercohan.com). I started following stocks in 1981 when I was in grad school at MIT and started analyzing tech stocks as a guest on CNBC in 1998. I became a Forbes contributor in April 2011. My 11th book is "Hungry Start-up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision" (http://goo.gl/ygaUV). I also teach business strategy and entrepreneurship at Babson College in Wellesley, Mass.

Lessons on Start-up Commons From Hong Kong And Singapore

On January 21 I returned from two weeks in Hong Kong and Singapore. The trip took 26 Babson College MBAs to visit with start-up CEOs, capital providers, and professors so they could learn about what it takes to start a business in these locations. The biggest lesson for Manila is that that governments can’t force start-ups to happen if they don’t fit the local culture.

The start-up common is based on a simple idea – a city or town has resources that can help or hinder the development of start-ups in that location. If those who create the resources give back to that start-up common, the location attracts more start-ups. If not, start-ups locate elsewhere.

It looks to me like start-ups are mostly good for a city or town. After all, they add jobs and tax revenue. And they spur the creation of related businesses that serve those start-ups like restaurants and hotels – not to mention professional service providers like capital providers as well as law and accounting firms.

A start-up common consists of six key elements. These include pillar companies – like Google and Apple – that serve as early start-up customers and sources of talent; universities; human capital – the local repository of workers from CEOs to engineers; financial capital – ranging from angel investors to venture capitalists; mentoring – both at the corporate and professional levels; and values – the kind of behavior that gets rewarded.

Hong Kong and Singapore governments have taken some action to create high-tech start-up commons. For example, Singapore makes available grants to start-ups that locate there. Under one program, for example, it will give about half a million dollars to a start-up that gets about $80,000 from a private investor.

But if a start-up does not achieve the financial targets that it agrees on as a condition of getting that money, the start-up is shuttered and the founder must leave the country. Moreover, once the start-up burns through that initial grant, there is little outside capital available so it must become profitable, attract an investor from outside the country, or shut down.

For its part, Hong Kong does not provide cash for high-tech start-ups. There, real estate is considered the king of investments. And to combine its love for commercial real estate with a desire to appear with-it in high tech, in 1999 Hong Kong granted Richard Li, son of Hong Kong’s wealthiest citizen, Li Ka-Shing, a sole-source contract to build the Cyberport – a beautiful collection of buildings far from the center of town where high tech companies would supposedly flourish. The Cyberport is indeed a nice collection of buildings but it has not spurred many successful high-tech start-ups.

In fact, despite efforts, neither Singapore nor Hong Kong has much to show for their efforts to create high-tech start-up commons. A business professor in Singapore could not site any examples of successful high-tech start-ups that had gone public in the mold of a Google (GOOG) or Apple (AAPL). And in Hong Kong the view seems to be that buying stock in a high-tech start-up is akin to purchasing a lottery ticket.

Underlying the failure to produce start-up commons in these countries is a different set of values than the ones that prevail in Silicon Valley. There, three things matter: giving back without expectation of immediate return, taking risks to disrupt big industries, and intellectual humility.

In Singapore and Hong Kong, parents want their children to get jobs with the government – for example, in Singapore, many people get paid millions of dollars a year with big pensions – or at investment banks. How else to afford the sky-high rents on tiny apartments or condominiums?

The cost of real estate in these countries is so high that it drives many other economic decisions. For example, people there generally live with their parents after graduating from college until they get married and can afford a place to live. All this emphasis on earning high salaries with low risk means that entrepreneurial aspirations are discouraged.

It is for this reason that the few examples of high-tech entrepreneurial activity in Singapore and Hong Kong come from people who were born outside of these countries. In Singapore, a very successful start-up called Bubble Motion that provides Twitter for voice, is growing rapidly in countries like India and the Philippines. One of its biggest investors in SingTel and its CEO is a California-born high tech CEO with five previous start-ups in his background.

And one of Hong Kong’s few high tech success stories is Outblaze, founded by Yat Siu, an Austria-born Worcester Polytechnic Institute drop-out.

The lesson for other citieis that I draw from the lack of success of the start-up commons in Hong Kong and Singapore is that government cannot make start-ups happen. Above all, the culture must be right for start-ups and if it’s not, government should find better ways to spend its money.

To be sure, it can make sense to try to attract pillar companies. For example, Oxford, Mass. used tax breaks to lure IPG Photonics (IPGP). But this leader in the fiber laser industry does not appear to have spurred the creation of other start-ups in the area that could broaden the region’s tax base. Thus if some other community offers IPG Photonics a better tax deal, it could move and take away all the jobs it has created.

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